In your financial life, there are a number of regular payments you need to budget for, such as rent, fuel, and groceries. These are expenses you take care of each week or fortnight, and you can plan for them by allocating a certain amount of your income to cover them.
However, there are also a number of irregular expenses that can crop up from time to time. These are different from emergency expenses – you willingly incur them, but you can’t always predict when they’ll happen or how much they’ll cost.
For example, you may need to pay for a new car tire or a quarterly electricity bill. If you are running a business, you might need to generate a W-2 form and pay employment taxes.
Since these expenses are less straightforward to predict, the question is this: how do you budget for them? In this article, we’ll look at some of the most common irregular expenses and how to budget for them. Let’s get started!
Home and Utility Expenses
Although rent or mortgages are predictable and regular payments, you may also have irregular expenses related to your home. This might include payments for:
- Cleaning services
- Gardening services
- Pest control
- Electrical or plumbing repairs
Utility and power bills are often irregular, as you may use more or less power depending on the seasons. Expenses like repairs and maintenance are expected to pop up from time to time, but one can never predict when or how much they’ll cost.
How to budget for them:
The best way to budget for home and utility expenses is to estimate how much you think you’ll need to spend in the next year, and spread that amount out over 12 months. So, if you think you’ll need to spend $1,000 on home repairs in the next year, you would budget for $83.33 per month.
You can also set aside money from your paystub each month into a “home and utilities” savings account, which will cover any unexpected costs that may come up. This is a good way to ensure you have the funds available when something needs to be fixed or replaced.
If you’re finding it hard to estimate how much these will cost, it helps to look back on past bills. Apply logic and reasoning if your circumstances have changed; for instance, if you now have a second person living in your home, you might double your power bill estimate.
Car and Transport Expenses
Like home expenses, car expenses can be both regular and irregular. For example, you may need to budget for:
- Regular petrol or diesel costs
- Servicing and repairs
- New tires or parts
- Parking permits or fines
- Public transport fares
How to budget for them:
Car expenses can vary greatly from month to month, so it’s important to have a good idea of your average monthly spending. You can do this by tracking your spending for at least 3 months. This will give you a good idea of how much you generally spend on things like petrol, repairs, and parking.
Depending on your insurance policy, it’s a good idea to put money into an account each payday to cover any potential car repairs. This will help you avoid being caught out if something goes wrong with your vehicle.
Medical and Dental Expenses
Medical and dental expenses are often unpredictable, as they can depend on things like how healthy you are and whether you need regular check-ups or treatments. Some common irregular expenses in this category include:
- Prescriptions
- Dental work
- Optical work
- Medical treatments or equipment
How to budget for them:
Healthcare insurance tends to cover a lot of these irregular expenses, but it’s still important to budget for them. Take any of your medical conditions into consideration when budgeting, and remember to factor in things like co-pays and prescriptions.
If you don’t have insurance, it’s important to set aside money each month to cover potential medical costs. You can also look into government assistance schemes or private health insurance plans.
Insurance Policies
Speaking of insurance, your policies are a great example of an irregular expense. Insurance bills aren’t usually paid on a weekly or fortnightly basis; most have intervals of at least one month, if not a half or a whole year.
This means that if you don’t have a savings plan in place, large bills can sneak up unexpectedly and reduce your savings to crumbs. Insurance policies to budget for might include:
- Car insurance
- Home insurance
- Health insurance
- Life insurance
- Pet insurance
How to budget for them:
The best way to budget for insurance premiums is to set aside a fixed amount of money each month. This will help you avoid being caught out if your policy premium increases, or if you need to pay for a new policy.
If you have more than one insurance policy, it might be helpful to break the total cost down into monthly amounts and set this money aside each payday. This will help make your budgeting easier in the long run.
Pet expenses
If you own a pet, the last thing you want is to be caught without enough money to pay for your ownership of that pet. Our pets are our family, and we should do what we can to make sure they’re taken care of.
This means budgeting for pet-related expenses, including food, toys, vet bills, and boarding/kenneling costs.
How to budget for them:
There are a couple of ways you can budget for your pet’s expenses. The first way is to set aside a fixed amount of money each month. This will help you cover most, if not all, of your pet’s regular expenses.
If you know that there are certain times of the year when your pet’s expenses will be higher (e.g. during the winter for vet bills and in the summer for boarding costs), you can budget for these times specifically.
Final thoughts
We hope these tips have helped you understand how to budget for irregular expenses. They can be tricky to budget for, and they present a more difficult task than generating a 1099 MISC tax form – but with a bit of organization and planning, you can make sure you’re always prepared.
